State Street Corporation · NYSE:STT
State Street — Goldman Sachs Financial Services Conference 2012
28 slides from State Street's conference presentation, Dec 4, 2012
Slide 1: The Way Ahead
Exhibit 99.1 Joseph L. Hooley Chairman of the Board, President and Chief Executive Officer Edward J. Resch Executive Vice President and Chief Financial Officer Goldman Sachs Financial Services Conference December 4, 2012 The Way Ahead
Slide 2: Agenda
LIMITED ACCESS The Way Ahead Agenda Strong Foundation Strategy for Growth Financial Performance Summary 2
Slide 3: Forward-Looking Statements
LIMITED ACCESS Forward-Looking Statements 3 This presentation contains forward-looking statements as defined by United States securities laws, including statements relating to our goals and expectations regarding our business, financial and capital condition, including without limitation, our capita
Slide 4: Strong Foundation
LIMITED ACCESS Strong Foundation 4 Strong Global Footprint Long-Term Shareholder Value Among Highest Capital Ratios in Industry Focused Strategy Fueled by Macro Trends Strong Global Footprint No. 1 or No. 2 Position in High-Growth Markets
Slide 5: Strategy for Growth
5 Strategy for Growth
Slide 6: Macro Trends Fuel Confidence in Future
LIMITED ACCESS Strategy for Growth Macro Trends Fuel Confidence in Future 6 Trend Driven by State Street Advantage Globalization • Increasing international trade flows: cross-border trade value in 2010 reached $7.7TN1 • Ongoing globalization of investment and distribution channels • Strong global fo
Slide 7: Strategy: Current Priorities
LIMITED ACCESS Strategy for Growth Strategy Current Priorities Drive New Revenue Growth through Innovation • Deepen share in high-growth markets ‒ Expand presence in alternatives market • Invest in the business ‒ Increase Exchange-Traded Fund (ETF) offerings ‒ Enhance derivatives clearing and collat
Slide 8: Drive New Revenue Growth Through Innovation – Deepen Share in High-Growth Markets
LIMITED ACCESS Strategy for Growth Drive New Revenue Growth Through Innovation ‒ Deepen Share in High-Growth Markets 8 Leader in Alternative Asset Servicing Alternative Assets Under Administration (AUA)1, $BN 1 HFM Week AUA Survey Assets as of April 2012 (hedge funds) and Custody Risk Alternative Fu
Slide 9: Drive New Revenue Growth Through Innovation – Invest in the Business
LIMITED ACCESS $2.0 $2.3 $2.7 $3.1 $2.3 $2.9 $3.7 $4.7 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 2012 2013 2014 2015 1 Based on State Street’s assets serviced compared to total market (see footnote 3). 2 Bloomberg, 6/30/12. 3 Source: McKinsey analysis, the Second Act Begins for ETFs, 2011; chart refle
Slide 10: Expand Investment Manager Operations Outsourcing
LIMITED ACCESS Strategy for Growth Drive New Revenue Growth Through Innovation ‒ Expand Investment Manager Operations Outsourcing 10 Global Middle Office Outsourced Assets, $TN 6/30/121 $TN 1 Scrip Issue Global Report (9/2012). 2 PwC, 15th Global CEO Survey, Asset Management Industry Insights, 2012.
Slide 11: Leverage the Power of the Core Franchise
LIMITED ACCESS Strategy for Growth Leverage the Power of the Core Franchise 11 Private Cloud • Three key operations transformation levers – Process transformation and standardization – Automation of key business processes – Centers of Excellence in a globally balanced model • Operations transformati
Slide 12: Leverage the Power of the Core Franchise
LIMITED ACCESS Strategy for Growth Leverage the Power of the Core Franchise 1 Compared to 2010 run-rate expenses from operations, all else being equal. The full effect of the annual pre-tax, run-rate savings is not expected to be achieved until 2015. Chart data based on the approximate mid-point of
Slide 13: Financial Performance
13 Financial Performance
Slide 14: Summary of Q3 '12 Operating-Basis Financial Results
LIMITED ACCESS Financial Performance Summary of Q3 ’12 Operating-Basis (Non-GAAP) Financial Results1 14 1 Results presented on an operating basis, a non-GAAP presentation. Refer to the appendix included with this presentation for explanations of our non-GAAP financial measures and for reconciliation
Slide 15: Q3 '12 Operating-Basis Revenue
LIMITED ACCESS Financial Performance Q3 ’12 Operating-Basis (Non-GAAP) Revenue1 15 $ in millions Core Fee Revenue Q3 ’12 Q2 ’12 % Change Asset Servicing Fees $1,100 $1,086 1.3% Asset Management Fees $251 $246 2.0% Total $1,351 $1,332 1.4% Market-Driven Revenue Q3 ’12 Q2 ’12 % Change Net Interest Rev
Slide 16: Expense Management Highlights
LIMITED ACCESS Financial Performance • Business Operations and Information Technology Transformation program on track – Successful use of global locations to improve operating efficiency, enhance service and reduce cost • Headcount controlled and actively monitored – Expect compensation-to-revenue r
Slide 17: Pre-Tax Operating Margin Relative to Peers
LIMITED ACCESS Financial Performance Operating-Basis (Non-GAAP) Pre-Tax Operating Margin Relative to Peers Pre-Tax Operating Margin 3 Months Ended 09/30/121 17 Pre-Tax Operating Margin 9 Months Ended 9/30/121 Strongest Operating Margin Among Peers 29.1% 26.7% 28.2% 20% 25% 30% STT BK NTRS 27.7% 26.6
Slide 18: Impact of Sustained Low Interest Rates on Net Interest Margin
LIMITED ACCESS Financial Performance Impact of Sustained Low Interest Rates on Net Interest Margin Operating-Basis1 Net Interest Margin Q3 2012 • 144 basis points 2012 Outlook • Continue to expect full-year NIM to be around the middle of a 145 to 155 basis point range 2013 Outlook • Continue to expe
Slide 19: Returning Capital to Shareholders is a Priority
LIMITED ACCESS Financial Performance • Maintaining industry-leading capital position • 2012 CCAR stress test: highest tier 1 common ratio of the 19 banks tested under stress by the Federal Reserve1 • Continuing to purchase our common stock under $1.8BN authorization announced in March 2012 – Year-to
Slide 20: Summary
20 Summary
Slide 21: The Way Ahead
The Way Ahead Globalization Retirement Savings Regulation and Complexity Long-Term Shareholder Value Drive New Revenue Growth Through Innovation Leverage the Power of the Core Franchise Optimize Capital 21
Slide 22: LIMITED ACCESS 22
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Slide 23: LIMITED ACCESS 23
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Slide 24: Appendix – Non-GAAP Measures
LIMITED ACCESS 24 Appendix – Non-GAAP Measures 24 The foregoing presentation includes financial information presented on a GAAP basis as well as on a non-GAAP, or “operating” basis. Management measures and compares certain financial information on an operating basis, as it believes that this present
Slide 25: Q3 2012 Non-GAAP Reconciliation
LIMITED ACCESS 25 Q3 2012 Q3 2012 vs. vs. (Dollars in millions) Q2 2012 Q3 2011 Total Revenue: Total revenue, GAAP basis $ 2,356 $ 2,423 $ 2,427 Add: Tax-equivalent adjustment not included in reported results 32 31 32 Loss on sale of Greek investment securities - 46 - Less: Discount accretion relate
Slide 26: Q3 2012 Pre-Tax Margin and EPS Reconciliation
LIMITED ACCESS 26 Q3 2012 Q3 2012 vs. vs. (Dollars in millions, except per share amounts) Q2 2012 Q3 2011 Pre-Tax Operating Margin(4): Income before income tax expense, GAAP basis $ 941 $ 651 $ 629 Net adjustments to revenue (8) 3 (14) Net adjustments to expenses (249) 44 85 Income before income tax
Slide 27: Nine-Month Operating-Basis Reconciliation
LIMITED ACCESS 27 (Dollars in millions) Total Revenue: Total revenue, GAAP basis $ 7,200 Add: Tax-equivalent adjustment not included in reported results 93 Loss on sale of Greek investment securities 46 Less: Discount accretion related to former conduit securities (162) Total revenue, operating basi
Slide 28: Peer Comparison: Operating-Basis Pre-tax Operating Margin
LIMITED ACCESS 28 Peer Comparison: Operating-Basis (Non-GAAP) Pre-tax Operating Margin Page 17 of this presentation contains a comparison of pre-tax operating margin for State Street Corporation (STT), The Bank of New York Mellon Corporation (BK) and Northern Trust Corporation (NTRS). The data in th
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